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Corruption in Sustainable Community Associates
Oberlin Review (April 21, 2006): In a June 23, 2003, e-mail to Oberlin city manager Rob Dispirito, Sustainable Community Associates (SCA) President Josh Rosen extolled the virtues of "a very successful minority-owned business in Cleveland" identified as Phil the Fire. Relating SCA’s bilateral negotiations, Rosen drooled: "They are interested in opening up a location in our building. This would become a real destination point for folks in Lorain County and be a major score for Oberlin. He asked me what programs or incentives Oberlin offers given he is looking at other locations in Lorain County. I was wondering if either the City or OCIC had a low interest loan pool or some other incentive program that can be explored. I was also curious as to what if any programs existed for minority businesses and minority business recruitment. We expect to meet with the owner sometime next week, and I think it would greatly improve Oberlin’s prospects of landing this business if we could discuss potential incentives with him." On March 14 and March 29, 2003, Ben & Jerry’s co-founder Jerry Greenfield, Oberlin College class of ‘73, executed two $20,000 promissory notes to Phil B. Davis, Phil the Fire’s flamboyant proprietor, at prime plus 200 basis points, collateralized by an equity stake in Phil the Fire. Mr. Davis, a former deodorant salesman, failed to make a single payment on the bargain-rate loans. On October 31, 2003, the well-heeled ice cream czar and the wannabe waffle king consummated a Halloween wing-and-a-prayer loan consolidation through a $100,000 line of credit issued by Shore Bank. Mr. Davis subsequently defaulted on every facet of the original loans. According to Cuyahoga County Court records, Phil the Fire’s tax returns, prepared by leading public accounting firm SS & G, show a loss of nearly $50,000 in 2002. In an amended July 19, 2004, brief attached to the extensive litigation spawned by Phil the Fire’s demise, Phil B. Davis declares on line #93, "Defendant never claimed that the operations of Phil the Fire on Shaker Square had yielded a profit after its first year of operations." The Ohio Department of Taxation affixed eight liens totaling $69,555.63 to Phil the Fire’s Shaker Square carcass. The Ohio Bureau of Workers Compensation weighed in with unpaid claims of $7,265.37. Mr. Davis’ Shaker Square operation inherited the retail storefront formerly occupied by Hungarian strudel purveyor Lucy’s Sweet Surrender, a 49-year Buckeye neighborhood fixture employing a bevy of elderly, veteran strudel kneaders. On assuming the balance of Lucy’s ten-year lease, Mr. Davis seized $75,000 in specialized bakery equipment belonging to Lucy’s proprietor Michael Feigenbaum. Lucy’s never fully recovered and, according to Mr. Feigenbaum’s Hotel Bruce web posting, is "living on fumes." On Sunday, March 26, 2006, the Cleveland Plain Dealer ran a front-page expose detailing the implosion of both the Shaker Square and downtown Phil the Fire and Waterhouse Restaurants, established with the financial backing of fugitive Atlanta hedge fund manager Kirk Wright. I, not any member of this body [Oberlin City Council], was the original source for that story. Wanted on state and federal mail and securities fraud warrants for allegedly absconding with $185 million in investor assets, Wright targeted novice minority investors, particularly professional athletes with significant discretionary income. Equipped, according to the New York Post, with "a materialistic streak that would make Madonna blush," Wright’s illicitly acquired auto collection included a Bentley, a Jaguar, an Aston Martin, a BMW and a Lamborghini. A March 9, 2006, Wall Street Journal article reported Mr. Wright’s financial seductions occurred in "suites he rented at Atlanta Falcon football games." Since February 2002, SCA’s financial patron, Home Depot co-founder Arthur Blank, has owned the Atlanta Falcons. According to Phil B. Davis’ Cuyahoga County court filings, Davis "met twice with Wright in Plaintiff’s Atlanta office." In a short, tumultuous five-month life-span, Phil the Fire’s illiquid downtown Cleveland gravy train racked up well in excess of a million dollars in unpaid debts and forfeitures — including over $15,000 in Ohio workers compensation liens — was on a C.O.D. basis with vendors and, according to Phil Davis’ July 28, 2004, court filings, had a chronic negative cash flow. Channel 19 reporter Scott Taylor ran an investigative piece broadcast March 14, 2004, on Phil the Fire Gateway’s imminent meltdown. On March 23, 2004, the IRS slapped a $226,259 tax lien on Phil the Fire for failure to pay federal withholding taxes. On April 15, 2004, Phil the Fire employees picketed outside the swank downtown eatery to protest their untendered paychecks. Although Phil Davis’ initial capital contribution to the Gateway Phil the Fire restaurant was a nominal $100, as set forth in the operating agreement, Mr. Davis retained a 60% ownership stake. On March 31, 2004, as the downtown Phil the Fire hemorrhaged cash and the chickens came home to roost, Mr. Davis borrowed $20,000, via a promissory note, from Phil the Fire’s talented chef, Alexander Daniels. Despite receiving $50,000 from Mr. Wright on April 26, 2004, in an impetuous, global out-of-court settlement, Mr. Davis defaulted on the bulk ($15,000) of Mr. Daniels’ unsecured loan and a contracted $11,000 culinary consultant’s fee. SCA’s failure to properly vet potential vendors is a classic example of the inevitable pitfalls of delegating substantial operational control of a major development project to irresponsible, inept neophytes. This is the Rubicon where the insufficient rubber check meets the incandescent yellow brick road. Last time I inquired, despite legions of tree-huggers, Oberlin wasn’t blessed with a biodegradable bond rating. SCA’s profligate, pedigreed opportunists treat Oberlin’s municipal reserves like Paris Hilton’s trust fund. Since March 25, 2005, these insufferable mendicants have squandered over $154,000 in HUD EDI Special Projects Funds — in addition to cannibalizing the city’s legal budget to the tune of $67,300 and inflicting economic development costs of $8,800 — on a poorly designed, fiscally untenable, perennially altered boondoggle that has yet to be formally submitted to the city planning board. This convoluted "reverse brain drain" Wrong Way Corrigan albatross deserves rapid embalmment, a cryogenic freeze or serious Freudian analysis. -Mark Chesler Oberlin, OH http://ouch.blog-city.com/sustainable_c |
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